Thursday, July 2, 2015

Rapid
development of digital technology, particularly information and communication
technology (ICT) enables movement of information and facilitate communication.
Perhaps, biggest impacts of ICT are towards marketing and online business. Question
is whether online business (also beneficiary of globalization) is a complement
or substitute to traditional bricks-and-mortars business? Then, can Malaysian
businesses, especially the small and medium enterprises avoid the threat from
foreign online giants while utilizing ICT to expanse their businesses?

Two unique success stories are worth to be analyzed.
First is Alibaba/Tao Bao, the first Asian online business that poses big threat
(or even possibility to replace) the American giants like Amazon and Ebay.
Second is Xiaomi, where their business model is revolutionary and seems being
followed by Apple too.

Alibaba/Tao Bao: New Online Giant

“The world’s greatest bazaar” – this was the
headline The Economist gave to Alibaba in their article 23rd May
2013. Subsequent comparisons of Alibaba
groups with Amazon and eBay (see Table 1) will prove that Alibaba is indeed
“greatest” in term of merchandise volume. For year 2102 comparison – before
Alibaba listed public, volume of goods traded through Alibaba is even more than
Amazon and eBay combine. However, Amazon still leads in term of revenue while
eBay’s profit is the highest.

Table
1: 2012 Financials (US$ billion) Comparison

Revenue

Net Profit / Loss

Gross Merchandise Volume

Alibaba

4.1

0.5

171.2

Amazon

61.1

- 0.04

87.8

eBay

14.1

2.6

67.8

(Source: The Economist, 23rd May 2013)

Two prominent companies in Alibaba’s group are Tmall
and Taobao. The former facilitates “business-to-consumer (B2C)” while the later
engages in “consumer-to-consumer (C2C)” e-commerce business. The Economist
reported Tmall capturing 51% of B2C market in China in 2011. Taobao’s C2C China
market share is a whopping 90%. No doubt that Alibaba group will change the
global landscape of online business and therefore worth further analysis.

A report entitle “E-commerce in China: Taobao”
(available at www.dwastell.org/MSc/Group6.pdf) did a SWOT
analysis on Taobao. Listed as strength are “lower entry cost”, “accurate market
position”, “developed instant message software (WangWang, QQ)” and “safety
payment intermediary (Zhifubao)”. Comparing to Malaysia, we also have all of
those strength except “market position” where China have huge domestic
population. Zalora (Malaysia online business) does have its relative strength
like fast delivery (1 to 3 days) and handle their financial transaction and
delivery. Yet, Zalora and other Malaysian e-commerce businesses seem restricted
to domestic market which is too small for economies of scale. Products sold are
also rigidly focused on apparels and electronics while Alibaba’s e-commerce
companies even sell islands! Some companies went online as a complement to
their brick-and-mortar business. For examples, Tesco, Pakson, Bata and IKEA
online segment is an added choice of service for their customers and not for
replacing their stores. Generally, it is believe that their in-store sales is
far more than their online sales.

Xiaomi’s Business Model

In
a workshop, a Chinese daily chief editor stunted the audience with the story of
Xiaomi’s business model. Xiaomi smart phones and other
telecommunication-related products are sold online directly by the company.
Setting a date and exact time for bidding, this business model can do without
dealer, brand representative or reseller shops. Imagine all brands do the same.
How many big reseller shops will be closed? Will buyers still need to shop at
phone kiosks that now mushrooming all over Malaysia? Direct online purchase,
whether for smart phone or extended to all retail transactions, will safe
distribution cost where its benefit can be passed to consumers for lower
selling price. This Xiaomi model may revolutionize business activities but as a
result, it can kill off many small and medium (SME) traditional bricks and
mortar retail businesses in Malaysia. In contrast, lots of huge benefits are
waiting for Malaysian SME and retail businesses if they can tap the global
market and reduce operating cost through digital technology, especially online
business. However, we must first learn the skill to swim fast enough before
digitalization waves drown us.

A
recent development may encourage (or scare) our local companies to act faster.
Apple Watch was launched for exclusive online sales only. Even though in-store
pick up option will be available soon, this Apple Watch online sales method
mirrored Xiaomi. If big brand like Apple started to test this business model,
who else want to miss out?

Urbanization
and Youth

Urbanization
moves people from rural to city and from one country to another (usually from
relatively lesser developed to more developed). This resulted in concentration
of population in city center and thus bring along the issue of high cost of
living, inadequate public welfare, concentration of purchasing power and labor
supplies. Domestic migration may also cause income inequality between rural and
urban and intra-inequality due to urban poverty. Meanwhile, international
migration causes brain drain problem and variety of social-political issues.

In
September 2013, Datuk Dr. Rahamat Bivi, Director General of Economic Planning
Unit highlighted eight challenges on urban development. There are social
exclusion (urban poverty and vulnerable group), inadequate social amenities
(education and health), inadequate housing (particularly for middle and low
income groups), youth unemployment, high cost of living, crime rate,
environment (congestion and pollution) and illegal foreign workers. Most of
those challenges are affecting Malaysian youth either directly or indirectly.

Table
1 shows that unemployment rate between urban and rural is about the same. Only
Negeri Sembilan, Penang and Selangor recorded significant differences. Urban
unemployment in Sabah is even higher than rural. All these statistics
indirectly indicate stressful living condition in urban and yet 60% of
migration in 2010-2011 are from youth age groups of “15 – 24” and “25 – 34”,
see Table 2.

Table 1: Unemployment Rate (%)

Year 2012

Average (2000 - 2012)

Urban

Rural

Urban

Rural

Malaysia

2.9

3.3

3.2

3.7

Johor

3.2

3.0

2.8

2.9

Kedah

2.3

3.5

3.2

3.6

Kelantan

2.3

2.3

2.9

2.9

Melaka

0.5

0.7

1.6

1.7

Negeri Sembilan

2.9

3.4

3.3

3.7

Pahang

2.7

2.9

2.8

3.1

Pulau Pinang

1.9

2.6

1.9

2.5

Perak

3.0

2.9

3.3

3.8

Perlis

3.7

4.1

3.2

3.5

Selangor

2.3

3.2

2.8

3.7

Terengganu

3.1

3.0

3.3

3.1

Sabah

6.1

4.6

6.5

5.0

Sarawak

3.7

3.3

4.5

4.1

Kuala Lumpur

2.7

NA

2.8

NA

Labuan

4.4

5.0

5.0

5.5

Table 2: Migration (2010 – 2011)

Age group

Female

Male

Total

65 & above

1.7

0.7

1.2

45 - 64

5.4

7.4

6.5

35 - 44

9.4

12

10.8

25 - 34

28.5

31.8

30.3

15 -24

31.5

27.9

29.6

1 - 14

23.4

20.2

21.7

(Source:
Migration Survey 2011, Department of Statistics Malaysia)

Urbanization
helps industrialization and service sector development that are concentrated in
urban. In turn, it helps economic growth. However, issue of inequality income
distribution, unskilled youth labor, high cost of living, urban safety and
other issues will drown youth before they can developed into productive human
resources.

Super-City:
Solution for Youth Brain Drain to Singapore?

Even
thought cities in Malaysia provide lots of job opportunities, wages is
relatively too low as compare to Singapore. Addition, cost of living is higher.
A Malaysian fresh graduate likely earnings between RM2500 and RM3000 working at
metropolitan like Kuala Lumpur, Butterworth and Johor Baharu. Salary at other
cities (like Muar, Kajang or even Ipoh) is less than that amount. Compare to
Singapore, Malaysian fresh graduate most likely can earn at least S$2000
(equivalent RM5400) and easily increases to S$2500 (RM6750) after few years. Bear
in mind Ringgit could depreciate further against Singapore dolor in future and
thus, widen this salary gap.

Lunch
could cost you at least RM10 in Kuala Lumpur city center but lower to about RM5
in other cities. Cost of living in Singapore’s Central Business Districts (like
Orchard, Marina and Raffles) is high. However, lunch at Woodland, Jurong and
Yishun (common working places for Malaysians) could be as little as S$3.00.

Malaysia
needs “super-city”, not just big city. Big city provides jobs but super city
provides very high paid jobs that match Singapore’s salary scale. This can be
achieved by concentrating on high value-added businesses especially high value
service sector like finance and information technology. Employment selection
should be professional and emphasized on merit and not base on race, family
ties, friendship, political link or cronyism. Only then we can have the best
and most productive employees at every level of employments that worth high
salary.

Big
city like Kuala Lumpur consist mostly offices with high rental (thus high cost
of living) and congested traffic. Super-city should be livable with mixture of
offices and housings as well as efficient public transport. Urban development
or town planning (where Malaysia seems failed) should be long term and
sustainable.

Conclusion

Globalization,
urbanization and digitalization – either individually or collectively – do
bring both threat and opportunity. Like it or not, Malaysia has been facing
this “triple-impacts tsunami”, which is not only inevitable but will grow
stronger and stronger. Thus, the important question is whether Malaysia is
“swimming gracefully” or “drowning awkwardly” in
globalization-urbanization-digital tsunami. Fast and appropriate actions or
policies should be taken in order for Malaysian swim into the benefit of this
triple-impact tsunami rather than drown.

[Chinese version published at Nanyang Press, 18th May 2015. Available online at http://www.nanyang.com/node/701429. This English version may be slightly different from the Chinese online/printed newspaper version]

Francis
Bacon (1561 – 1626), an English philosopher and Father of Scientific Revolution
claimed three inventions had changed the world. First is printing, which he
considered as “humanist scholarship of Renaissance” that enable pamphlets and
writing of Reformation. Second is gun power that ended chivalry, changed
warfare and thus developed new form of state. Third is compass, which enables
worldwide geographical exploration and discovery for the likes of Columbus and
Vasco da Gama. Of course these European exploration subsequently resulted in
colonization of so called “new world” includes Malaya.

Perhaps,
in the future, invention of Doraemon’s “Anywhere Door” (Dokodemo Door in
Japanese) will greatly changes logistic system, reduces traffic jam and
subsequently affecting almost all aspects of social-economy. Now, three
phenomena have been changing the world, especially to developing countries like
Malaysia. They are economic globalization, digitalization (proxy by
“information, technology and communication” or ICT development) and
urbanization.

Globalization
– usually comes together with liberalization – opens up trade and investment
opportunities. Globalization is not a new thing but the latest New Silk Roads
proposed by China may change the world economy and therefore worth global
attention. Together with rapid ICT development, global online business of
Aliaba/Tao Bao and Xiaomi can revolutionize way of doing business. Both of
these future global changes involve China. Indeed, the Francis Bacon’s “three
inventions that changed the world” – printing, gun power and compass – also
originated from China. On localized aspect, continuous urbanization poses both
benefits and threats to Malaysian social economy.

Trend
and Comparison

In
his paper in Applied Economics journal Vol.38 (10), Axel Dreher created an
“Index of Globalization” with sub-index on economic, social and political
globalization. Subsequently, these indexes are continuously updated by his
Swiss Federal Institute of Technology, Zurich, Switzerland and been used as
indicator for level of globalization. Based on Figure 1, Malaysia’s economic
globalization sharply increased in the three years of 2009, 2010 and 2011.
Urbanization is a consistent process while ICT development is rapidly
improving. However, how does Malaysia’s progress compares to other countries?

Let
divided “other countries” into three groups of selected (a) ASEAN countries,
(b) developed countries, and (c) Brazil, Russia, India, China and South Africa
(collectively known as BRICS countries). The first group (ASEAN) reflects our
progress relatives to our neighboring countries. The second group (developed
countries) reflects our benchmark where we want to be among them. The third
group (BRICS) is considered as “super-stars developing economies” just like the
“Asian Tigers” where Malaysia was once called. Comparisons with these three
groups are shown in Figure 2 to Figure 4 respectively.

Figure
1: Malaysia’s “Triple-Tsunami” Progress

(Source: “EGI” from Swiss Federal
Institute of Technology; “urbanization” is percentage of urban population from
World Bank; “IDI” from International Telecommunication Union, ITU)

Among
our neighbors, it is very clear that Malaysia’s development in all three aspects
of economic globalization, urbanization and digitalization is better than all
selected major ASEAN countries except Singapore. Figure 2 shows Malaysia (dotted
line) cover-up all other countries except Singapore.

Figure
2: “Triple-Tsunami”: Selected ASEAN Countries

Figure 3: “Triple-Tsunami”: Selected Developed Countries

Figure
4: “Triple-Tsunami”: BRICS Countries

Surprisingly,
Malaysia level of economic globalization is higher than selected developed
countries (Figure 3) and BRICS countries (Figure 4). Information, communication
and telecommunication (ICT) development as proxy for digitalization is a
relative weakness for Malaysia. South Korea, the world second best ranked in
ICT Development Index is far ahead of Malaysia. Nonetheless, higher rank in ICT
development aspect does not necessary good. Example, in United Kingdom, its
citizens have been heavily criticizing their government for over-liberalized
ICT sector until selling and allowing foreign entities controlling major ICT
companies and technology there. On the other hand, China gave strong challenges
to United States in online businesses; most glaring example is Alibaba/Tau Bao
group. Perhaps, it is due to China’s relative uniqueness in term of high
domestic population and very low cost of production. Other countries include
Malaysia did not enjoy that uniqueness, thus have to fully utilize the benefit
of these triple-tsunami factors. Malaysia also moderately urbanized. Comparing
to developed countries, Malaysia still lags behind but better than China, India
and South Africa. This implies big room for further urbanization which is
currently concentrated on Klang Valley (mega cities such as Kuala Lumpur and
Petaling Jaya) and few capitals of certain state like Johor Baharu, Ipoh,
Penang city center and Kuching.

Globalization
China through New Silk Roads

Globalization
intensifies movement of goods and services as well as capital. This resulted in
changes in method and location of productions as well as intensity of
international trade. Few decades ago, China has been single out by United
States for its “anti-globalization” and “anti-trade” policies. However, when China liberalizes
their economy and export began to growth strongly, the American and European
started to violate the free trade spirit promoted by them. New tariffs and
concerns were hurdled against China as well as South Korea. Thus, is free trade just a game? Is
that we play by its rule if it can benefit us and quit the game if otherwise? Regardless of the answer, globalization is an
unstoppable process and it can be good (opportunities) or bad (threat) to any countries
include Malaysia.

To
the surprise of the world, coming decades of economic globalization could be
leaded by China after the announcement of “One Belt, One Road” big plan by
China’s President Xi Jinping in 2013. The “one road” is actually not only one
but covers land road, railways, sea and air, which together also known as the
“New Silk Roads”.

A
simple Google Image of “New Silk Roads” will show the Economic Belt involving
physical roads or railways through northern China to Middle East before links
to Moscow and Europe (Turkey, Rotterdam and Venice). According to United Nation
Comtrade’s database, Malaysia’s main export and import destinations in 2013 are
Singapore, China, Japan, United States and Thailand. Besides China, other
nations are out of this Economic Belt Silk Road. Perhaps, the most likely
affected European trading countries are Netherland, Germany, France and Italy
but their volumes of trades are not that much as compare to our top five
trading destinations.

It
is the Maritime Silk Road that may give biggest impact to us. Will it be opportunity
or threat? It depend on an extraordinary bold move – create a “Ma-Thai Canal”
together with Thailand just like the “Suez Canal”. The Maritime Silk Road will
benefit Singapore much more than Malaysian ports. The “Ma-Thai Canal” that cut
through border of Malaysia-Thailand significantly reduces shipping time and
cost. Thus, Malaysia (and Thailand) can position themselves to get significant
benefit from any success of China economy or the New Silk Road.

Some
historical information will be scary to Malaysia. It is believed that a Thai
Canal at Kra Isthmus (the narrowest part of the peninsular in Southern Thailand
border) has been proposed as early as 1677 by Thai King Narai. This idea has
recently re-surfaced with variety of location inside Thailand being proposed
for feasibility study. The latest in 2015, China-Thailand collaboration is
proposed. What will happen to Malaysia’s economy, especially port and shipping
industries if Thailand go alone or in cooperation with China? Thai Canal
cooperation seems suit China’s New Silk Roads plan very well too. Imagine we
jump into the partnership with Thailand (or even include China) for a win-win
situation. Our northern ports along this canal will be busier than Singapore
port, which is impossible for us to achieve now. Then, we can swim happily in
the wave of globalization.

Summary

Malaysia
is somewhat less than developed countries (include Singapore) but more than
ASEAN and majority of BRICS countries in the process of globalization-digitalization-urbanization.
On economic globalization, some see it as new form of colonization but some see
it as a big window of business opportunities. Now China has its Maritime Silk
Road plan. Singapore has superior strength in its entreport and service
sectors. Thailand seems renewed its intention to create a maritime canal. Thus,
Malaysia needs to act fast to ensure at least we can still float in economic
globalization wave.

[Chinese version published at Nanyang Press, 11th May 2015. Available online at http://www.nanyang.com/node/699914. This English version may be slightly different from the Chinese online/printed newspaper version]

Wednesday, July 1, 2015

(找出超级服务业)Sun Tzu’s Art of War
advised to pull out from losing battle but reinforce the winning ones. Despite
overall great potential for service sector, there are losers and winners sub-sectors.
Therefore, it is important to clearly identify them, pull out from the
declining sub-sectors and reinforce the growing ones. Unfortunately, publicly
available data is so limited to make any precise analysis. Thus, three model of
analysis are used to identify potential service sub-sectors.

Semi-static Comparison (Model A)

Semi-static comparison
model compare the potential of service sub-sectors within two static time
frames, namely “Period 1” and “Period 2”. “Period 1” takes average value for
year 1987 to 1989. “Period 2” takes average value from year 2011 to 2013.
“Period 2” is more important as it take latest available data. “Output
contribution to Gross Domestic Products” (GDP) and “labor share” for each
service sub-sectors are compared over two periods. All data for this model are
obtained from World Bank.

Based on Figure 4,
“wholesales, retail, hotel and restaurant” sub-sector has the higher output
contribution to GDP for Period 2 as well as biggest improvement between the two
periods. “Finance, insurance, real estate and business service” are second
highest contribution and improvement.

Figure 4: Service Sub-Sector Output Contribution to GDP (%)

Based on Figure 5, “wholesales, retail, hotel and restaurant” used
the highest labor share follows by “other services” sub-sector such as
community, social and personal service. “Finance, insurance, real estate and
business service” came third yet recorded the second biggest improvement over
the two periods. In contrast, labor share for “other services” sub-sector
decline from 42.97% in Period 1 to 31.69% in Period 2. Adding “productivity”
factor to “output contribution to GDP” and “labor share”, we get “Bubble graph”
as in Figure 6. The size of bubble represents productivity, which is measured
in term of “output per labor”. “Utility” (also known as “Electric, Gas and
Water supply”) sub-sector is omitted as it does not yield much room for
creative development.

Analysis from Figure 4 to Figure 6 reveals that “wholesales,
retail, hotel and restaurant” and “finance, insurance, real estate and business
service” consistently outperformed other sectors. Hence, that two are the potential
service sub-sectors to be focused on further development. Nonetheless, Model A
also reveals that some room for improvement for the two sub-sectors.
“Wholesales, retail, hotel and restaurant” needs to improve on its productivity
while it will be nice if “finance, insurance, real estate and business service”
can offer more job opportunities.

Four Quadrant Analysis (Model B)

Four quadrants analysis
used data from Bank Negara Annual Report 2011. Top right quadrant is most
preferred as it implies highest contribution share to GDP and highest growth.
In contrast, bottom left quadrant is least preferred.

Figure 7: Service Sub-sector Annual Growth vs.
Share to GDP for Year 2010

Figure 7 shows that
“wholesale and retail trade” has relative high growth and high share to GDP,
thus is a “superstar” in service sector. Continue robust consumer spending and
recovery of motor vehicle supply distribution that was disrupted due to
Fukushima disaster will be helpful to maintain such high growth in the future.
Malaysia should put more resources into this sub-sector.

Putting extra effort to
develop “finance and insurance” sub-sector may push it into superstar category.
Liberalization of finance sector and expansionary monetary policy to counter
global economy recession will encourage low interest rate that will boost
growth in bank lending. Malaysia is third largest domestic currency bond market
in Asia excluding Japan. Malaysia also has a dominant 47% share in global sukuk market. These indicate potential
of this sub-sector.

“Rising stars” which
has high growth but not yet contribute highly to GDP are located in the top
left quadrant. They are “communication”, “utilities” and “transport and
storage”. Rapid growth of broadband penetration is booster for communication sub-sector.
However, potential slowdown trade and manufacturing may negatively affect
demand for transport and storage as well as real estate and business service.
There is limited growth potential for utilities service. Despite much hype on
tourism industry, its related sub-sector, namely “accommodation and restaurant”
still stuck with relatively low growth and low share to GDP.

Despite only taking
only one year of statistic to make inference, the three best sub-sectors that
Malaysia should focus on are “wholesale and retail trade”, “finance and
insurance” and “communication”.

Super Service Industry

Services (or products) with no outstanding advantage or
superiority is easy to be replaced thus, has many substitutes. In economic
theory, these services are elastic and usually less value-added. In contrast,
super service industry that serves global markets can also enjoy economic of
scales and brand premium.

Referring to Figure 8, service sector is the most preferred and
best potential economic sector in Malaysia. We are ready to further develop it
with service sector being heavily focused in Economic Transformation Program
(ETP). Within service sector, analysis (Model A and Model B) selected “Wholesales,
Retail
trade”,“Finance,
Insurance” and “Real Estate and Business Services ” as potential sub-service
sectors. Government already have a finance
master plan to promote “Finance, Insurance”, so we only focus on “Wholesales, Retail trade” and “Real
Estate and Business Services ”. For “Real Estate and Business
Services ”, in
order to be the super industry it need to increase the annual growth to the top
right quadrant. Within these selected
sub-sectors, two specific businesses are proposed to be developed into “super
industry”. They are (i) online retailing (with Alibaba group as benchmark)and
(ii) shared service and outsourcing (with India as benchmark).

Figure 8: Major Sector, Sub-sector and Specific Industries Selection

(i) Online retailing

Online click is more user-friendly and convenience nowadays. After globalization and new technology
evaluation, many conventional warehouse and retails business are heading toward
online such as Tesco (grocery), Parkson (department store) and Bata (apparel),
Watson (Health and beauty) and IKEA (home and garden). We have few Malaysian
owned e-commerce companies such as Youbeli, Q0010 and Lelong. However, a survey
from eCommerce-MILO revealed that foreign owned but Malaysia-based subsidiaries
seem more popular. Top three shopping preferences are Groupon, Facebook, and Livingsocial.

Globalization of online shopping culture has brings additional
foreign competition from the like of Alibaba’s TaoBao and T-Mall (China), Ebay
and Amazon (both United States). During the special event day like on 11
November 2014 (known as ‘singles Day’), TaoBao sold over RMB57.1 billion (about RM31.1 billion ) worth product and
Malaysian was the top 10 spending
customer on that day. Why Malaysian not prefer to buy the good on local online
market?

TaoBao have comparative advantage as compares to Lelong. Most of
the products sold there are made in China, which is very price competitive.
Thus, TaoBao able to offer cheaper price as compare to Lelong. Buyers are
motivated by low price and online information enable easy comparison.

(ii) Shared service and outsourcing

According to Multimedia Development Corporation (MDC), share
service and outsourcing (SSO) is an industry
that is fast gaining momentum in Malaysia as well as part of Business Service
projects of the National Key Economic Areas (NKEA). SSO worldwide and Asia
Pacific markets are respectively expected to worth US$38 billion in 2015 and
US$15 billion in 2016. Malaysia’s SSO market in 2011 are US$537 million and
expected to growth to US$997 million at an expected compound annual growth rate
of 13.1%.

MSC Malaysia also reported that Malaysia has 252
SSO companies but majorities (160) are multinational, generating RM9.14 billion
revenues and providing 58,448 high-value jobs with average net salary of RM5000
per month.

Given relatively good physical and information
technology infrastructure (IT), lower wages workforce in related work fields
(like IT support) and general proficiency in English language as well as multilingual
ability, Malaysia is well positioned to tap a bigger global market share. This
competitive advantage has been reflected in A.T Kearney’s Global Services
Location Index where Malaysia has been ranked 3rd in eight
consecutive years until the latest 2014 ranking (see Figure 9).

Using the 2014 A.T Kearney’s Global Services
Location Index, Malaysia has better “business environment” as compare to India
and China but far behind Singapore (who ranked 48th). In the “people
skill and availability”, Malaysia is worse than India, China and Singapore.
Singapore obviously has the disadvantage of high business cost reflected in
“financial attractiveness” aspect of the ranking. Malaysia relative competitiveness sandwiched between India and China.

A.T. Kearney highlighted that smaller pool of labors hinder
Malaysia but has advantages in term of politically stability, multilingual
environment at reasonable rates. All those advantages fit well for companies
with mid-sized demand and a lower risk appetite. Excellency in IT, Business Process
Outsourcing (BPO), and voice services has sustained India as an undisputed
leader in SSO global market. Quoting, National Association of Software and
Service Companies (NASSCOM), A.T. Kearney reported the sector in India today
employs one million people and represents 25 percent of India's total exports.
Meanwhile, SSO is more domestic focused in China currently. Yet, with
transition to service-oriented economy and government’s support, China’s SSO is
expected to growth strongly.

[Chinese version published at Nanyang Press, 19th January 2015. Available online at http://www.nanyang.com/node/676254. This English version may be slightly different from the Chinese online/printed newspaper version]